Key points
- Samsara shares surged post-earnings, rising an impressive 19.39% last week, showing robust growth.
- Despite bearish sentiment, a technical breakout signals the potential for sustained momentum.
- Analysts remain cautious, but Samsara’s strong fundamentals and breakout offer investors optimism.
- 5 titles we prefer to Samsara
After breaking out after reporting earnings, Samsara NYSE: IOT is now firmly in the spotlight as its stock has soared. With a stunning fourth-quarter earnings report released on Thursday, March 7, Samsara once again captured investors’ attention, beating Wall Street estimates and triggering a significant surge in its stock price.
Last week’s earnings-fueled breakout pushed shares of the tech company up a notable 19.39%. Over the past year, the stock is up more than 100%, showing impressive growth. The year-to-date performance is equally impressive, with the stock up 17.32%.
Post-earnings, the stock broke out of a long consolidation, signaling a shift in trend and momentum over a broader time horizon. While the stock’s gains are impressive to say the least compared to the previous year, the major breakout of the consolidation suggests it may just be the beginning. So, let’s take a closer look at the company and its recent earnings to see whether the momentum might continue or not.
Samsara beats estimates
Samsara reported fourth-quarter earnings and revenue that beat Wall Street targets, causing its shares to rise more than 14% in extended trading. For the quarter ended Feb. 3, the company reported earnings of 4 cents per share on an adjusted basis, a notable improvement from the 2-cent loss reported in the same period last year. Revenue for the quarter rose 48% to $276.3 million, beating analysts’ expectations. Additionally, annual recurring revenue from subscriptions increased 39% to $1.1 billion, demonstrating solid underlying business growth.
Sentiment is bearish despite earnings rising
Despite the impressive rise in profits, analyst sentiment remains essentially unchanged compared to previous months and slightly bearish, in favor of the bears. Samsara still holds a Hold rating based on nine analyst ratings, unchanged over the past three months.
However, a potentially worrying sign for bulls is that the consensus price target suggests a potential downside of around 19.42%, with the target set at $31.56.
Short interest remains a factor to consider in Samsara’s trading dynamics. With the recent post-earnings breakout, the potential for a short squeeze scenario could further amplify the upside momentum. As of February 15, the percentage of float sold short was 6.8%, down nearly 13.5% from the previous month. This indicates that shorts have started to cover, as the stock has remained stable amid improving fundamentals, technicals, and a robust market and economy.
Another essential factor to consider is insider trading. Despite the stock’s favorable technical setup, a potentially worrying sign is that there have been ten insider sales and no insider purchases over the past twelve months, totaling outflows of nearly $300 million. Most recently, on March 5, 2024, the CEO sold $3.1 million worth of shares, adding to previous insider selling activity.
Despite the bearish sentiment, IOT is trending higher
Following the earnings release, Samsara experienced a significant technical breakout. As volume increased, the stock broke above resistance within the previous consolidation range, indicating a significant change in momentum. A notable uptrend could occur if the stock holds its position above the resistance, near $36, and keeps the earnings gap higher. If IOT manages to build a new base above the breakout zone, a sustainable uptrend will form above the rising key moving averages, followed by bullish momentum.
Samsara’s latest earnings report and subsequent breakout have reaffirmed investor confidence in the company’s growth trajectory. While analyst sentiment remains cautious and short interest persists, albeit declining, the strong fundamental performance and technical breakout present compelling reasons for optimism. As the stock continues its upward surge, investors should closely monitor its ability to sustain momentum and navigate potential near-term volatility.
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